IMF demands pension & land reform, privatization, anti-corruption

ECONOMY NEWS

IMF demands pension & land reform, privatization, anti-corruption

During his June 20 visit to Washington, Ukrainian President Petro Poroshenko met with IMF Managing Director Christine Lagarde, who stressed the importance of balanced pension reform, the president’s press service reported. They also discussed state privatization prospects, Ukraine’s banking system, state finance reform and the fight against corruption, according to Poroshenko’s website.

According to the IMF press service, as cited by Interfax-Ukraine, the talks were focused on pension reform, land reform, as well as measures on speeding up privatization and securing concrete results in fighting against corruption.

Alexander Paraschiy: The press releases of the Presidential Administration and IMF reveal their differing reform priorities. In particular, the president’s press release devotes much space to pension reform, while nothing was said about the land reform that was mentioned in the IMF’s release. That might indicate the Ukrainian government is not confident about its ability to approve legislation this year launching the farmland market, which puts the next IMF tranche under risk.

Of the four items mentioned by the IMF, Ukraine has had the most success in demonstrating its anti-corruption efforts. Just this week (and perhaps in time for the IMF meeting), Ukrainian anti-corruption investigators were asked to open criminal cases against two MPs, one from the president’s own faction and the other from a coalition faction, who have been accused of taking bribes by the anti-corruption prosecutor.

POLITICAL NEWS

Poroshenko returns from Washington with intensified Russia sanctions

Ukrainian President Poroshenko visited the White House for a June 20 meeting with U.S. President Trump, after which both leaders remarked positively though without specifics. Poroshenko said he gained the Trump administration’s “firm support” in Ukraine’s conflict with Russia, with Trump giving clear orders for “wider cooperation.” After meeting with Poroshenko, Defense Secretary James Mattis reiterated in a press release full U.S. support for maintaining sanctions against Russia and enhanced cooperation with Ukraine in the defense sphere. White House Spokesman Sean Spicer confirmed that the Trump administration views Russia as an aggressor in Donbas.

The meeting between the two presidents occurred shortly after the U.S. Treasury announced it expanded and intensified its sanctions against Russia to include 38 more citizens and companies involved in the occupation of Crimea and Donbas. Among them were 20 subsidiaries of Transneft, Russian state monopoly oil transit firm. Among those targeted for intensified sanctions was Aleksandr Babakov, who has a vast business empire in Ukraine that includes eight regional electricity distribution and supply firms. The sanctions will remain in place until Russia upholds the Minsk Accords and withdraws from Crimea, the press release said.

Zenon Zawada: So far, so good for the Ukrainian government. Firm U.S. support for Ukraine can’t get any clearer than enhanced sanctions against Russia. They put to rest any speculation that Trump or Tillerson will attempt to adapt a friendly foreign policy towards Russia anytime soon. U.S.-Ukrainian energy deals should surface in the coming months, which would be particularly successful if they reduce Ukraine’s dependence on natural gas from Russia.

The situation with defense is far more delicate. News reports mentioned that Poroshenko discussed with Tillerson obtaining defensive weapons. Though it’s positive that Ukraine is exploring all its options, we don’t see securing such weapons as realistic anytime soon, especially with U.S.-Russia tensions re-escalating in Syria this week. Introducing new weapons would go too far in disrupting the current balance in Donbas.